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An Environmental Protection Agency rule proposed in June to regulate discharges of toxic pollutants from power plants was significantly altered during White House review to include additional regulatory options for industry, an EPA document shows.

The newly added options are generally seen as less stringent than the initial EPA proposals because they establish lesser numeric effluent limitations and exclude from regulation certain sizes of plants and waste streams.

Overall, the Clean Water Act proposed rule was revised to include eight potential regulatory options, instead of the five in the proposal sent from EPA to the White House Office of Management and Budget in January for oil, natural gas, coal, and nuclear power plants that generate more than 50 megawatts of power. The eight options outlined by OMB vary in the number of waste streams covered, the stringency of the treatment controls to be imposed, and the size of the units controlled.

OMB also revised the proposal to update the preferred options for implementing best available technologies and new source performance standards. The White House further changed calculations of monetized benefits from the proposals, revised employment numbers related to effects of the proposal, and altered text on its cost-effectiveness, the document shows.

The proposed rule would regulate discharges of toxic pollutants such as mercury, zinc, phosphorus, and selenium from 1,200 power plants nationwide and any potential new power plants.

The proposal also discusses potential regulation of coal ash from power plants, although EPA is drafting regulatory requirements for coal ash in a separate rulemaking under solid waste law. During the regulatory review and before the water pollution proposed rule was published June 7, EPA itself deleted the original section that discussed the regulation of coal ash and replaced it with a new section that suggested for the first time that regulating the residue from coal-fired power plants under the nonhazardous waste provisions of Subtitle D of the Resource Conservation and Recovery Act “could be adequate,” according to the EPA document.

Changes by OMB, EPA

The EPA document, a red-line copy of the proposed effluent guidelines indicating changes, shows that both OMB and EPA separately made changes to the proposal during the review process. EPA posted the document to the rulemaking docket in conjunction with the proposed rule's publication (78 Fed. Reg. 34,432).

EPA and OMB did not directly respond to requests for comment on the effluent guidelines review process.

Effluent guidelines are technology-based regulations to control industrial wastewater discharges subject to annual review and revision under Section 304 of the Clean Water Act, according to EPA. Limits on specific pollutants set in previous effluent guidelines are incorporated into discharge permits, and facilities must meet those limits.

EPA estimates the options outlined in the proposed rule could impose annual compliance costs of between $185 million and $954 million on industry, and could result in pollution reductions of 470 million to 2.62 billion pounds.

The agency is accepting public comment on the rulemaking through Sept. 20. EPA must finalize the effluent guidelines by May 2014 under a 2012 court-approved settlement with environmental groups.

Changes Followed Industry Meetings

Representatives from the power industry and rural electricity generators and distributors met with OMB in the weeks preceding the rule's release to encourage further consideration of the costs to industry. Environmental groups met with OMB in late February to emphasize the importance of proposing strong effluent guidelines for toxic pollutant discharges (44 ER 921, 3/29/13).

In the rulemaking docket, EPA updated supporting documents, including the technical development document, regulatory impact analysis report, environmental assessment report, and the benefit and cost analysis report, based on the alterations.

One of the options added by OMB-- identified in the proposed rule as option 3a-- would impose the lowest annual compliance costs at $185 million. That option would not impose any effluent limitations for flue-gas desulfurization wastewater, which environmental groups say are necessary to protect human health and the environment.

Five environmental groups have called OMB's role in the proposed effluent guidelines rulemaking “highly unusual” and “improper” for proposing the additional regulatory options.

Additional language was added at multiple locations throughout the document to request additional public comment on aspects of the rule. It was not clear whether EPA or OMB added that language.

Language was added to the rule that requests comment on the proposed discharge thresholds for each of the waste streams identified in the rule and commenters were asked to suggest possible discharge thresholds for power plants under 50 megawatts.

Coal Ash Discussion

Language was also added during the OMB review process that asked for public comment on the proposed alignment of the separate rulemakings for effluent guidelines under the Clean Water Act and coal ash management under RCRA.

In the proposed rule, EPA said it would try to align the regulatory and implementation of the two rulemakings “to minimize the overall complexity of these two regulatory structures, and facilitate implementation of engineering, financial and permitting activities.”

The agency has long been working on a regulation governing the management of coal ash. In 2010, EPA proposed either regulating the material under the hazardous waste provisions of Subtitle C of RCRA or under the nonhazardous waste provisions of Subtitle D.

Coal ash recyclers and utility groups have argued the threat of hazardous waste regulation of the material has harmed beneficial reuse of the material. EPA recently issued a notice of data availability seeking comment on new information relevant to the coal ash rulemaking (44 ER 2291, 8/2/13).

Groups Reaction to Review

Eric Schaeffer, director of the Environmental Integrity Project, said OMB continued to increase its role in the rulemaking process but never has to defend its decisions publicly.

“We're increasingly concerned with the advance work on rulemaking that industry is able to do through OMB,” Schaeffer told BNA in a statement. “Anything EPA does takes places in a fishbowl--the agency must defend its decisions on technical, economic, and legal grounds and virtually every important rule ends up in court, where that process starts all over again. OMB doesn't operate with that level of accountability, so it's unsettling to see their extensive markup of a proposal it will never have to explain or defend.”

Schaeffer said many of the additions to the proposed rule appeared to have come from pressure from industry lobbyists and significantly weakened the environmental protections in the rule.

The Edison Electric Institute and Kristy Bulleit, a Hunton & Williams attorney representing the Utility Water Act Group, were both unavailable for further comment on the OMB review process, but the Edison Electric Institute stressed flexibility was vital to the regulation in a previous interview.

“It is critically important that EPA ensures any final ELG rule is based on accurate, representative data and sound analyses, and that EPA sets reasonable and achievable compliance limits and deadlines, to develop an economically viable and environmentally protective revision to the steam electric effluent guidelines,” Richard Bozek, director of environmental policy for the Edison Electric Institute, told BNA July 23. “This will help to minimize costs to customers and is consistent with the industry's ongoing investments to transition to a cleaner generating fleet and enhanced electric grid.”

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